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Debt Collection Tactic Violated State Law, Not Federal Law
Description Appeals court held that a creditor, attempting to collect a debt owed, could not be sued by debtors for violation of federal debt collection law, but could sue for violation of state debt collection law that limits the amount of attorney fees that may be claimed.
Topic Consumer Protection
Key Words Debt Collection
C A S E   S U M M A R Y
Facts Davis Lake Community Association is a homeowners' association that maintains a planned development community. A restrictive covenant gives the Davis Lake authority to collect quarterly assessments and other maintenance charges from all residents. Davis Lake sued residents who failed to pay assessments for a year despite notices. The fees owed were $200; Davis Lake also sued for attorney fees of $2380. Defendants filed a counterclaim for unfair debt collection practices in violation of state and federal law. The trial court held for Davis Lake. Defendants appealed.
Decision Reversed in part. The federal Fair Debt Collection Practice Act does not apply because no debt collector is involved. Davis Lake was attempting to collect its own debt. The North Carolina Debt Collection Act does apply because the homeowners are consumers subject to debt collection for household purposes. The attorney fees allowed under the state act, fifteen percent of the total debt, are far less than those demanded by Davis Lake. This is an unfair practice under the state act because it is a misrepresentation of the amount due, for which the homeowners have a claim. Further, defendants may claim for damage to their credit reputation and emotional distress. That claim may go to trial.
Citation Davis Lake Community Association, Inc. v. Feldmann, - S.E.2d - (2000 WL 718036, Ct. App., N.C., 2000)

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